The past 18 months has tested everyone and undoubtedly had a lasting effect on our society. Employers have had to react quickly to what felt like constantly changing restrictions, to put the health and safety of their employees above all else.
With many businesses forced to close or operate remotely for such a prolonged period the economic impact is certain to be ongoing for some time to come, and the impact on the financial wellbeing of millions of working Brits is already significant
Following our recent report, Building Employee Resilience, we delved into the specific impact of COVID-19 on UK households and uncovered some issues that employers may not realise are placing a strain on their home lives.
An employee's level of financial wellbeing is not always determined by their income, but more so by their attitude, habits and behaviours. Where some people have found they have been able to spend less and save more through the lockdown, others have found their outgoings and spending habits have changed drastically, and are no longer able to cope.
In our report, The Employers Guide to Financial Wellbeing 2020-21, we discovered that 41% of employees say they've been more stressed since 1st April 2020.
Here are just a few of the key issues that could be having a profound impact on employees’ financial wellbeing, and affecting their health and happiness both at work and at home:
Long lasting impacts
According to a report by UK Finance, when the pandemic hit, 1.9 million households needed a mortgage payment holiday from their lenders, and the Guardian recently reported that 2.6m renters are expected to be falling behind on their rent payments. As the most major outgoing employees face, this clearly indicates that even though the lockdowns may have been temporary, some people were forced to make decisions that will affect their income and expenses for some time to come.
A recent study by Aviva shows that 57% of employees feel they are just about getting by financially and 24% of employees feel they have made bad decisions about debt during the pandemic ( this includes 51% of 18-24 year olds.)
Further statistics released by the ONS suggest that the groups that were financially impacted at the start of the pandemic were still worse off up to mid-April 2021.
Spend less, save more?
Although 85% of UK adults have said they have spent less during the lockdowns (Report by AA Financial Services), there are still those who have found the change in circumstances has put pressure on other areas of expenditure. Recent studies from the citizens advice show that 2.5 million people are behind on their broadband bills, with 700,000 of these falling into the red during COVID, and 2.1million households were behind on their energy bills by the end of 2020.
However, there was some good news, the AA Financial services report also showed that 31% of people with savings accounts have increased their monthly deposits. This is again countered by Aviva’s Thriving in the Age of Ambiguity report which highlights that even though some may have saved, 30% of employees actually don’t feel the money they have saved during the pandemic is going to last.
According to the Bank of England, at the height of the pandemic, more than nine million employees had been placed on furlough by their employers. This figure represents nearly a third of the UK working population, meaning that even if your employee is still in fully paid employment it’s highly likely that a family member, partner or housemate may not have been.
Our Employers Guide to Wellbeing 2020-21 study also showed that those with poor financial wellbeing are 1.7 times more likely than those with high financial wellbeing to be providing financial assistance to loved ones. This is despite almost a quarter of them having to borrow money themselves to help others.
The time to act is now
So, as we emerge from the Covid-19 cocoon, employees are more focused than ever on managing their finances, making it a crucial time for employers to support their employees' financial health better.
Here’s just a few ways you can show understanding and help to encourage better financial wellbeing for your employees:
Put COVID-19 related wellbeing questions into employee surveys to find out how your people are feeling - and check in regularly with these surveys.
Use communications to build awareness and create a healthy culture when it comes to talking about money.
Build employee benefits programmes that can help salaries go further and help ease the stress of managing money and debt.
Provide meaningful financial education to encourage better habits, answer questions, and keep employees up to date on issues that affect them.
Encourage saving to help bolster your employees' resilience and their focus on the future.
Employees need to safeguard their futures; a good pension scheme is the first step to feeling secure.
Let us help
Still need a little guidance? Then maybe take a look at our toolkit - How to implement a financial wellbeing programme, for a six-step process that ensures you create an effective, holistic programme that works for your people.
If you want to learn more about how you could implement Salary Finance to support your employees’ financial wellbeing, get in touch.